Apple Will Have No Choice…


Great unbiased Venturebeat article on Apple. Thank you.

Have a few thoughts to share (and curious if you have any feedback).

As someone intimately familiar with the Post-Bill-Gates internal consequences at Microsoft, I see all the same behaviors at Apple, and I suspect we will see the same ‘lost decade’ of results. The difference is, Apple does not benefit from the network effect of entrenched products as did Microsoft, and Apple’s fall will be more rapid and their time to adapt much shorter.

Over the past six years I’ve suggested that Apple will continue to bet on the consumer and fail – because (a)the accumulated media of the past century is now widely distributed, and (b) the touch-screen revolution that propelled Apple’s iPhone revenues is widely distributed, and (c) everyone in the world is researching the verbal-AI revolution since they’re aware that’s the next interface hurdle, and (d) the Bauhaus design ethic is firmly entrenched worldwide.

And so there are no ‘failures of engineering and design’ among device manufacturers that Apple can compensate for, and use to obtain large consumer market share as both Apple and Microsoft had done during their evolutions. We tend to think of Apple and Microsoft as innovators, but they were merely consumer commoditizers of existing technologies during an era of pent up demand. This condition no longer exists in the world – just the opposite. Industrial design for consumer users has been adopted everywhere in the mainstream.

So, as far as I can see, Apple has no choice of means of maintaining share price other than pivoting to business and industry, and displacing Microsoft – who, for cultural reasons, is the software equivalent of IBM/DEC/WANG in the industrial space, and Motorola/Nokia in the mobile phone space.

Yet as (a) the merger of iOS and Mac OS groups (another mistake we saw Microsoft make in the pursuit of false operating system efficiencies) and as (b) the abandonment of the power-user market with the new ‘Mac Air’ rebranded as ‘Mac Pro’ and the termination of the mac pro line (c) the abandonment of network/backup devices (d) the continuous abandonment of the professional market (video editing), (e) the abandonment of the ‘maintainable’ mac server hardware (f) the abandonment of the mac server software community (g) the failure of Apple to produce competitive cloud services — all of which indicate Apple is either gambling on an other miracle-research-and-development effort (historically a terrible tragedy),

Now, perhaps I’ve been studying business and industry transformation for too many decades, but it would seem far more prudent to maintain a portfolio and CREATE a network effect as a resistance to unpredictable innovation by a wildcard competitor, and to continue the trend of making industrial engineering innovations usable by consumers and power users, than it would be to continue to put all one’s eggs in a consumer basket when consumers are fickle and industry allows you to create an entrenched revenue stream.

Microsoft repeatedly pursued false efficiency instead of creating separate units that pursued the interests of different users. And when they did so they still caused havoc: attempting to move users to the xbox platform instead of preserving the ‘elite’ gamer on the PC and the ‘casual’ gamer on the xbox. There are no efficiencies. There are only lost opportunities.

Microsoft also abandoned their evangelists, abandoned their dominance as an application platform, and they are currently in the process of abandoning the .net stack that they tried to use to create a walled garden.

And on a broader horizon, given the influence the ‘new age’ companies have on the stock market and as a consequence the economy (FB/email-fax, Google/YellowPages, Apple/AT&T-Communications) we are living in the most fragile economy since the end of the roaring twenties. Why? Because quite a few of us know how to displace Facebook, google, apple and Microsoft. And of those only Microsoft retains a durable network effect. And the only company currently capable of eroding the Microsoft network effect is Apple – because their products are simply better in every regard. The only think preventing Apple from displacing Microsoft’s revenues is the acquisition of and incorporation of a virtualization product and thereby achieving for Apple with Microsoft achieved because of IBM/DEC.

Just as a bit of humor: there is a correlation between the launch of a tallest building and a market crash. Meaning that any economic conditions allowing for a new tallest building are indicators of an economy that will bust.

I recognize the same effect in Apple’s spaceship office. The fact that anyone would do that, is an indicator of a bubble that will bust.

I suppose that the function of those of us who are students and teachers of business cycles can ‘help’ Apple by writing about it quite a bit. And pushing ideas into the public discourse that are culturally suppressed internally.

But I suspect that the damage that will be done to Apple by the first five years post-Steve will be so significant that (like Microsoft) it may not be possible to correct it.

Company cultures function analogously to an instruction set, and companies can only calculate what instructions are culturally available. Apple (like google and FB) have cultures (as did MSFT) that enshrine values that gave rise to them and were mythical at the time – and are now simply false.

Curt Doolittle
The Propertarian Institute
Kiev, Ukraine.


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